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Bank OZK (OZK) Beats on Q4 Earnings as Revenues Rise Y/Y
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Bank OZK’s (OZK - Free Report) fourth-quarter 2021 earnings per share of $1.17 surpassed the Zacks Consensus Estimate of 98 cents. The bottom line reflects growth of 25.8% from the year-earlier quarter’s number.
Results were aided by an improvement in revenues, partly offset by higher expenses. The company also recorded provision benefits in the quarter, which was a major tailwind.
Net income available to common shareholders was $149.8 million, up 24.3% from the year-ago quarter.
For 2021, earnings per share of $4.47 surpassed the Zacks Consensus Estimate of $4.28. The bottom line reflects growth of 97.8% from 2020. Net income available to common shareholders was $579 million, up 98.4% from the previous year.
Revenues Improve, Expenses Rise
Quarterly net revenues were $296.1 million, up 11.2% year over year. The top line surpassed the Zacks Consensus Estimate of $273 million.
Net revenues for 2021 were $1.11 billion, up 11.3% year over year. The top line surpassed the Zacks Consensus Estimate of $1.08 billion.
Quarterly net interest income was $266.4 million, up 12.1% year over year. Net interest margin, on a fully-taxable-equivalent basis, grew 53 basis points (bps) to 4.41%.
Non-interest income was $29.7 million, up 3.6% from the year-ago quarter. The rise was due to an increase in almost all fee income components, except for gains on sales of other assets, loan service, maintenance and other fees, and increase in cash surrender value.
Non-interest expenses were $110.1 million, up 6.5%. The rise was due to an increase in almost all cost components except for deposit insurance and assessments, telecommunication services, write-downs of foreclosed and other assets, and amortization of intangibles.
Bank OZK’s efficiency ratio was 37.06%, down from 38.61% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Dec 31, 2021, net loans were $18.09 billion, down from $18.91 billion recorded as of Dec 31, 2020. As of the same date, total deposits amounted to $20.21 billion, down from $21.45 billion at the end of December 2020.
Credit Quality Improves
The ratio of non-performing loans, as a percentage of total loans, contracted 6 bps year over year to 0.19% as of Dec 31, 2021.
In the reported quarter, the company recorded a provision benefit of $8 million against provision for credit losses of $6.8 million in the year-ago quarter. Net charge-off ratio to average total loans decreased 10 bps year over year to 0.04%.
Profitability Ratios Improve
At the end of the fourth quarter, return on average assets was 2.25%, up from 1.79% in the year-earlier quarter. Return on average common equity was 13.08%, up from 11.36%.
Share Repurchase Update
In the reported quarter, Bank OZK repurchased 3,387,421 shares for $156.4 million.
Our Take
Bank OZK’s solid loan balance, along with its business restructuring and branch consolidation initiatives, are expected to continue aiding revenue growth. However, operating expenses are likely to stay elevated on the back of the bank’s efforts to improve technology and invest in franchise, which will likely hurt profits.
Robust advisory business, reserve releases and a rise in loan demand drove JPMorgan’s (JPM - Free Report) fourth-quarter 2021 earnings of $3.33 per share. The bottom line handily outpaced the Zacks Consensus Estimate of $3.01. Results included net credit reserve releases. Excluding this, earnings were $2.86 per share.
JPM’s equity markets revenues and fixed-income markets revenues fell 2% and 16%, respectively, on a year-over-year basis. Total markets revenues of $5.3 billion declined 11%. While lower rates continued to hurt JPMorgan’s interest income, it was more than offset by a rise in loan balances.
Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2021 adjusted earnings of $1.04 per share surpassed the Zacks Consensus Estimate of $1.02. The bottom line represents a rise of 8.3% from the prior-year quarter.
BK's quarterly results were aided by provision benefits and a rise in fee income. Growth in asset balances was another tailwind. However, a marginal fall in net interest income and higher expenses were the undermining factors.
Citigroup (C - Free Report) delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 handily outpaced the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter.
Citigroup’s investment banking revenues jumped in the quarter under review, driven by equity underwriting as well as growth in advisory revenues. However, fixed-income revenues were down due to declining rates and spread products.
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Bank OZK (OZK) Beats on Q4 Earnings as Revenues Rise Y/Y
Bank OZK’s (OZK - Free Report) fourth-quarter 2021 earnings per share of $1.17 surpassed the Zacks Consensus Estimate of 98 cents. The bottom line reflects growth of 25.8% from the year-earlier quarter’s number.
Results were aided by an improvement in revenues, partly offset by higher expenses. The company also recorded provision benefits in the quarter, which was a major tailwind.
Net income available to common shareholders was $149.8 million, up 24.3% from the year-ago quarter.
For 2021, earnings per share of $4.47 surpassed the Zacks Consensus Estimate of $4.28. The bottom line reflects growth of 97.8% from 2020. Net income available to common shareholders was $579 million, up 98.4% from the previous year.
Revenues Improve, Expenses Rise
Quarterly net revenues were $296.1 million, up 11.2% year over year. The top line surpassed the Zacks Consensus Estimate of $273 million.
Net revenues for 2021 were $1.11 billion, up 11.3% year over year. The top line surpassed the Zacks Consensus Estimate of $1.08 billion.
Quarterly net interest income was $266.4 million, up 12.1% year over year. Net interest margin, on a fully-taxable-equivalent basis, grew 53 basis points (bps) to 4.41%.
Non-interest income was $29.7 million, up 3.6% from the year-ago quarter. The rise was due to an increase in almost all fee income components, except for gains on sales of other assets, loan service, maintenance and other fees, and increase in cash surrender value.
Non-interest expenses were $110.1 million, up 6.5%. The rise was due to an increase in almost all cost components except for deposit insurance and assessments, telecommunication services, write-downs of foreclosed and other assets, and amortization of intangibles.
Bank OZK’s efficiency ratio was 37.06%, down from 38.61% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Dec 31, 2021, net loans were $18.09 billion, down from $18.91 billion recorded as of Dec 31, 2020. As of the same date, total deposits amounted to $20.21 billion, down from $21.45 billion at the end of December 2020.
Credit Quality Improves
The ratio of non-performing loans, as a percentage of total loans, contracted 6 bps year over year to 0.19% as of Dec 31, 2021.
In the reported quarter, the company recorded a provision benefit of $8 million against provision for credit losses of $6.8 million in the year-ago quarter. Net charge-off ratio to average total loans decreased 10 bps year over year to 0.04%.
Profitability Ratios Improve
At the end of the fourth quarter, return on average assets was 2.25%, up from 1.79% in the year-earlier quarter. Return on average common equity was 13.08%, up from 11.36%.
Share Repurchase Update
In the reported quarter, Bank OZK repurchased 3,387,421 shares for $156.4 million.
Our Take
Bank OZK’s solid loan balance, along with its business restructuring and branch consolidation initiatives, are expected to continue aiding revenue growth. However, operating expenses are likely to stay elevated on the back of the bank’s efforts to improve technology and invest in franchise, which will likely hurt profits.
Bank OZK Price, Consensus and EPS Surprise
Bank OZK price-consensus-eps-surprise-chart | Bank OZK Quote
Bank OZK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Large Banks
Robust advisory business, reserve releases and a rise in loan demand drove JPMorgan’s (JPM - Free Report) fourth-quarter 2021 earnings of $3.33 per share. The bottom line handily outpaced the Zacks Consensus Estimate of $3.01. Results included net credit reserve releases. Excluding this, earnings were $2.86 per share.
JPM’s equity markets revenues and fixed-income markets revenues fell 2% and 16%, respectively, on a year-over-year basis. Total markets revenues of $5.3 billion declined 11%. While lower rates continued to hurt JPMorgan’s interest income, it was more than offset by a rise in loan balances.
Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2021 adjusted earnings of $1.04 per share surpassed the Zacks Consensus Estimate of $1.02. The bottom line represents a rise of 8.3% from the prior-year quarter.
BK's quarterly results were aided by provision benefits and a rise in fee income. Growth in asset balances was another tailwind. However, a marginal fall in net interest income and higher expenses were the undermining factors.
Citigroup (C - Free Report) delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 handily outpaced the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter.
Citigroup’s investment banking revenues jumped in the quarter under review, driven by equity underwriting as well as growth in advisory revenues. However, fixed-income revenues were down due to declining rates and spread products.